From Farm to Fortune: Toph Day on Building Businesses, Leading with Humility, and Fueling Innovation in the Midwest (Part Two)

Forbes Books presents The Startup Science Podcast with Gregory Shepard, brought to you by startupscience.io. Greg is an entrepreneur who's built and sold 12 businesses, a recipient of 4 private equity awards, featured TEDx speaker, and Ben Bella Publishing and Penguin Random House author. Here's Gregory Shepard.

I'm back with Tofte, the CEO of Elevate Ventures. We've been talking about his incredible journey from growing up in a strict household on a small farm to becoming a powerhouse in the venture capital world. So, Toph, you're hyper-focused on building a statewide ecosystem in Indiana. Some people listening might wonder, do you have to be in Indiana to get funded? Can I be in another state? How does Elevate Ventures work with regards to your hyperfocus on Indiana?

So Elevate Ventures mothership. So pre-seed, seed, Series A innovation-driven companies have to either be headquartered or have a significant presence in Indiana. So you could, the CEO could be in Boston. We have companies like this today. The CEO could be in Boston, but it makes sense for all of their build-out or expansion or operations to be in Indiana because of their customer base, for example, or access to researchers or access to talent or Whatever it might be, access to distribution. So many different reasons that, um, when, like, so Rally, for example, we, we run one of the world's largest pitch competitions, right? A $5 million pitch competition. And so 4 of the 5 winners in year 1 have all set up shop, either moved or set up all their expansion in Indiana because it's much more cost efficient for them to do so. Whether it's cost of operations is much more efficient, um, access to talent, partners, distribution, customers. They were shocked when they came here and saw how easy it was to navigate the ecosystem. And then this year, the, the, this past year of Rally, all 5, or, or 2 of 'em were winners of, uh, 2 of the winners were from Indiana. The other 3 are, are moving here, uh, setting up manufacturing in one case, for example. What people don't realize about Indiana is it's actually the innovation capital of the world. So if you're listening to this, go Google innovation capital of the world, or where is the innovation capital of the world? And you'll see Indiana on the first page mentioned with other folks like Switzerland that comes up as the most innovative country. And of course you have San Francisco pops up and other markets. And I'm curious actually if you're on your computer right now, real time to see if it comes up, Greg.

I hope it did. It came up.

It did?

It came up and it shows that it's trademarked.

Oh, well, there you go. So it must be true if it's on the first page of Google that we're the innovation capital of the world. But then people say, Well, how could you say that? Well, global economists talk about a concept called the productivity boom. And the productivity boom is basically all about the disruption of data and technology faster than ever with all sectors. They believe the epicenter of this global phenomenon is going to occur in the middle core of the United States, mainly because of the proximity of industries with one another and cost structure. So if that's true, then I would submit that actually Indiana is at epicenter and why? So there are 7 ingredients why: infrastructure, talent, mission-critical industry, technology, lifestyle, cost of living, regulatory environment. Now I'll just rattle off a few. In infrastructure, we have the number 1 ranked infrastructure in the United States. We have the number 1 ranked airport in North America, like 12, 13 years running. We have the only premier inland port system. We move, make, and manage things better than anybody else. Talent. We have the number 1 undergraduate engineering college in the country, 27 years running per US News and World Report. That's Rose-Hulman. Purdue has number 1 ranked online engineering, multiple number 1 online engineering degrees. IU is the largest medical school. Notre Dame's largest Catholic university. The list goes on with talent. We produce the world's greatest talent. We produced the first Man on the moon. We had the number one highest valued pharma company in the world, the number one pure play ag company, the number 2 animal health company, the number 2 healthcare system. We're the orthopedics capital of the world. We're the RV capital of the world. We're the advanced manufacturing capital of the world. We're the wood capital of the world. We're the amateur sports capital of the world. We're the racing capital of the world. These are all real stats. We go into technology, over $126 billion in capital announcements in just the last 8 years. 3 federal tech hub designations. We have 8 Fortune 500 companies, multiple billion-dollar-plus companies. We get into lifestyle and cost of living. We have the most affordable place to live, the best place for college grads, number 1 best place to start a company 2 years ago, number 2 last year, safest place to live, best place to raise a family. The list goes on. The number 1 children's museum in the world. And then a few years ago, ranked number 1 for regulatory environment. 94% of the legislation that we pass is passed in bipartisan fashion. And that's just the tip of the iceberg. I could go on for another 30 minutes about number one top 5 rankings, but the world just doesn't know it because we don't talk about it. So that's why we're so excited to welcome the world to our home. And we love doing business with people outside the state as well and across the nation, indeed across the globe. But I think the future is, it's really hard. You think about access and opportunity. And you go to markets like San Francisco, Boston, New York, Austin. I love all these markets. These are all wonderful markets, right? And I've spent time in all those markets. I've had offices in some of them. They're all wonderful. But most of them, you either get access or you get opportunity. You don't get both. And in Indiana, you can get both access and opportunity much more efficiently. And you want to go to the big city, you want to go to the mountains, you want to go to the ocean, you pop on a plane, you're there in 4 hours.

And it's center, right? So it's located, so it's easy to get around.

I can get to New York, to Boston easy. I can get to San Francisco easy. I get to Austin easy. Salt Lake City, Seattle, right? We get to either of those places on a direct flight.

All the meccas. I want to shift gears again because I'm really excited about talking about Rally.

Yes.

I had the opportunity to go speak at Rally. I had never heard of the show before, and I got contacted.

By the way, your session, was awesome. People were talking about that for weeks afterwards.

Oh, thank you so much. I really, really appreciate that. Yeah, but thank you. Thank you. I really appreciate that. Um, I mean, I went there and I was like, I was like, okay, I'm going to Indiana. I, I have to admit I'd never been to Indianapolis before. So I was like pretty excited, you know, because of the speedway and everything. I was like, this is, this is so cool. And I went there and I could not believe the conference. I was like, this is like a San— a legit San Francisco Silicon Valley conference.

Yep.

In Indianapolis. And like you said, it's a, it's a key, it's a secret, right? I went there and I was just blown away. And so, I mean, you're the guy that started this whole thing, right? And it's one of the best conferences I've ever been to. What made you come up with this idea? How did you turn it into this amazing conference? I mean, what's behind this whole thing? Because I was like, Floored. I have to admit, I had no, I did not expect that. It was just absolutely amazing.

So, well, thank you so much for saying that. I, we are so, you just gave me chills. We're so excited about Rally. So the initial thought process, and literally I laid in bed at night for probably 7, 8 years thinking about these concepts. And so, but having all those previous companies and kind of by accident being all these different sectors, I have always learned more from people who have companies that are not in my industry. They do. I have a buddy that owns a bunch of pizza restaurants and I learned more tidbits from him. I have another buddy that owns an HVAC company and the business ideas I hear from him, I'm like, oh my gosh, I could totally apply that to what I'm doing. And then the other piece is when I talk to people who are not entrepreneurs, Who are not investors. They lead foundations, they lead universities, they're teachers in K through 12, they're policymakers. They all have these different perspectives, right? They have these different experiences, these different professional situations that have shaped the way they think about things. And when you get cross-sector disparate stakeholder people in one place at one time, We like to think of Rally as where global innovation convenes. And you get all those people in one place at one time, magic happens. And a lot of people leave Rally and they're like, I don't know what it was, but it was awesome and I couldn't put my finger on it. And I think the finger on it piece is when we go to conferences historically, it's a SaaS conference, right? It's a manufacturing conference. It's a marketing conference, it's whatever. We, and with the world no longer can be thought of in sectors or stakeholders that live in their silos. It is converging. And like, literally, I don't know if you feel the same way about like the last 9 months, literally. We are accelerating. Like this moment we're talking right now is the slowest rate of change that you and I will ever experience, right? Tomorrow we wake up, it's going to be faster. And so like, it just seemed like there had to be something different for us to experience each other, right? And each other's learnings and experiences in a different way, right? And so we talk about these words like collision, convergence, curiosity, vulnerability. Like the theme this year is creative curiosity, especially with AI, right? We can't believe what we see. We better be checking it. 2 or 3 or 4 different ways. And so that was kind of the premise of, by accident, all those businesses over 27 years. And then thinking about this middle corridor of the country being such a big part of the global economy, and yet people historically refer to it as flyover states. I summarily, and just for all the listeners out there, we are summarily rejecting today, we shall never refer to the middle corridor of the United States ever again. as flyover states, right? There are a lot of, there's a lot of amazing things happening out here and where we can partner, right, with companies on the coast, companies across the globe in very efficient, effective ways. And so that's kind of the whole premise of how Rally came about. If you don't mind, I'll rattle off some stats real quick on the first 2 years of Rally.

No, please. I mean, I love that show. It was like my favorite conference for the whole year. I was, Yeah, I would love you to.

So, so in the first 2 years of Rally, we've had nearly 7,000 people come from 12 countries, 39 states, 5 Canadian provinces, uh, 10, uh, $1 million pitch winners, uh, 297 VCs, $27.6 billion in AUM, over 50,000 collisions or meetings that we could track, uh, happened. And there's a bunch of other stats, but like, that's some of the high-level stats. We always have amazing speakers like yourself come that have done amazing things. We bring in some keynotes that are big names. We've had people like Peyton Manning and Magic Johnson, Tia White, Crystal Washington, Marcus Lemonis. I'm forgetting several of the big keynotes. We got some baller keynotes lined up for this year too that we'll be announcing soon.

Yeah, I'm excited about it. I mean, I'm definitely going. I hope I could speak again. I know that you guys don't usually accept people second time, but, uh, but it was like so much fun. I just, I was like, I'm going to go either way. Love it.

We just keep it fresh, right? So like we tried to repeat the same speakers every year, but like gap years, right? Uh, now you're gonna make me feel bad.

Uh, no, no, no, no, no, no, no, no. I didn't mean to do that. I'm sorry.

I, you have a new book out. Maybe we have a book signing or something.

Yeah, that'd be, that'd be awesome. Yeah. I sent you the book.

I don't know if you got it. Yes, I got it. I love it. That's awesome. Yeah.

Did you see that? I put a gold-plated $100 bill in there.

Yes. That was my favorite. Yeah. Sitting right there on my desk. Nice. Very, very cool.

Okay. So rally, best show I've been to, best speakers. The exhibit hall is epic. I mean, the whole thing is really, really, really well put together. Shout out for my friend Troy who just smashed it. Yeah. Just smashed it out there. Um, in closing, let's do a couple more questions. I know you're busy. Just gimme 2 more questions real quick. Uh, what emerging trends or technologies are you most excited about outside of AI? Because obviously, you know, everybody's talking about AI when you think about the future of entrepreneurship.

So outside of AI, okay. So one, just one quick stat I have to share. I just saw the other day, you got Salesforce revenue per FTE, $387,000. And now the average AI company's trending towards like $3.8 million revenue for FTE. That's pretty, the impact that's gonna have on the market is gonna be insane. The trend I'm most excited about is the convergence. So this cross-sector idea, so injecting innovation into hard product, you know, so you think about, you know, sports tech for example, right? How we, you know, can inject, you know, you're injecting software now into hard devices or batteries, or just think of any like age-old thing. That could be a seat at a stadium and how you inject sound into the seat, right? That infiltrates your body, right? With waves, right? With energy, right? Not a speaker. So those kinds of things I find really fascinating and we're seeing more and more of it. It feels like every week.

What do you think of industrial transformation? You know, the concept of going back to the industrial age and redoing everything?

Yes. So we just, I mean, we just had a pitch just a little bit ago that battery manufacturing, they take this massive set of ovens and all this equipment and all this, these PFAS awful chemicals, remove it from the equation, a whole different way to manufacture. I'm sorry, I know there's no video on this podcast. I'm waving with my hands here, aren't I? But basically you take a, think about a massive line that's, you know, however many feet long and compresses it to, let's call it 15% of the size. That is really fun and sexy. Or there's a company in Northern Indiana called SmokerCraft and they've pontoons. You would think a pontoon's pretty simple, right? Well, actually it's not. The pontoon where it curves up and comes in, to the point of the pontoons on the front of the boat is a very odd shape. There's no common shape for it. And so how you inject robotics into that to be able to now weld those, right? And they're also going to keep the old craftsmen on one line so they never lose that craftsmanship. But all the rest of the expansion is being done through robotics. So I think the industrial How innovation will impact the Industrial Revolution from, you know, 100 years ago is going to be fascinating.

Yeah. I mean, if you think about what an impact the Industrial Revolution had to the United States, imagine that happening again, but with robotics and AI. I mean, holy smokes, right? This is—

If you think about the Agricultural Revolution took hundreds of years, that was centuries, lasted centuries, right? The Industrial Revolution, Lasted decades. The digital revolution lasted years. The AI revolution is happening literally in hours, minutes.

It's just the acceleration is just out of the— I mean, speaking of the book, I was thinking how much easier it would've been if I had ChatGPT when I was writing that book. I mean, I'll bet people are writing future books with that, you know, because it's so much easier. Last question. What do you see the future of Rally and Elevate Ventures over the next 5 to 10 years?

Yep. So the next, uh, 5 to 10 years for Rally, uh, we want it to be the undisputed, uh, best, uh, innovation conference on the planet, period, full stop. Um, we would love to see that organically grow to about 100,000 people. And so right now we're in the 3,500 to, we'll have, we'll for sure have 3,500 people this year. Could be as high as 4,000 or 5,000. And we hope that organically grows to about 100,000 people in the next 10 years. And to be, just be known as that is where you go for innovation, convening cross-sector disparate stakeholders, where magic happens is one. And then for L8 Ventures, our plan is to have $1 billion in assets under management in 10 years. And we're launching the next step of that as we're launching the first ever growth fund headquartered in the state of Indiana. And that will have an Indiana focus and a middle quarter or United States focus of investing in cross-sector innovative companies. So it'll be a $200 million fund. The $25 million anchor is in place and we're getting ready to go to market to raise that fund.

Toph, I really appreciate your time and energy. Thank you so much for joining the podcast. Very much.

Thank you. It's been an honor, Greg. I'm humbled to join and it's great to see you in person today.

Same here. And that's it for another episode of the Startup Science Podcast. If you enjoy the show, please leave a 5-star review on Apple or Spotify. Founders, as a thank you for leading the change, I'm offering free access to Visionaries by Gregory Shepard, a one-stop platform with an academy, investor match, grant finder, pitch finder, and a whole lot more. Please visit GregoryShepard.com/Visionaries.

Thank you.

And use code FOUNDERS, all capital, for free access to the platform. Until next time, namaste, my friends.

The Startup Science Podcast with Gregory Shepard is brought to you by startupscience.io. Founders can log on to startupscience.io and use code FORBES to get free access. To connect and find out more about Greg, go to gregoryshepard.com. The Startup Science Podcast is a production of Forbes Books.